Schools’ revenues top $3B

Local private colleges and universities generated a total of $3 billion in revenue and spent $2.8 billion during fiscal years ending in 2008, financial filings from the schools show.

Income from tuition and fees led to revenue increases for these institutions in the latest financial filings, but the beginning of the economic downturn also showed up, in slight endowment declines.

Financial documents for fiscal years ending in 2008 show that most local private schools had modest increases in revenue and expenses. Results were reported largely before the economic collapse and stock market downturn of the fall, which slashed endowments.

The Rochester Business Journal requested a Form 990 from the University of Rochester, Rochester Institute of Technology, St. John Fisher College, Roberts Wesleyan College and Nazareth College of Rochester.

RIT, UR, Nazareth and Roberts Wesleyan provided forms for the period that ended June 30, 2008. St. John Fisher provided a 990 for the fiscal year ending May 31, 2008. Form 990 is an informational return that must be filed each year with the Internal Revenue Service by tax-exempt organizations with annual receipts greater than $25,000 a year.

The filings showed UR drew the largest total revenue with $2.3 billion. By comparison, RIT, with the second most, brought in $539 million in total revenue.

Nazareth College was the only local institution to see its revenue drop in the fiscal year ending in 2008, to $81.8 million from $87.2 million.

The filings show signs of the early effects of the economic downturn in terms of return on endowment investments, said Ronald Paprocki, senior vice president for administration and finance at UR. But the timing excluded most of the harsher effects that occurred during the fall, he noted.

"The big hits in the capital market did not occur until September or October, but you did see the initial effects of the economic crisis with respect to endowment returns," Paprocki said. "After several years of double-digit returns, we had a decline of $118 million in the endowment value due to a flat investment performance during the period ending in June 2008. It flattened out and we used endowment resources, so that created a decrease in the value of the endowment."

The total amount spent on salaries and other compensation rose for all schools, both for officers and directors as well as for all other employees. Here again UR led the way, spending a total of $1.2 billion on compensation for current and former officers and all other employees along with contributions to pension plans and benefits. This also includes compensation to what the IRS defines as disqualified persons, those in a position to exercise substantial influence over the affairs of the organization during a five-year period and to benefit from transactions.

The university had 6,319 employees who made $50,000 or more.

Salary and compensation made up the largest portion of total functional expenses for all schools, from 39 percent at St. John Fisher to 60 percent at Roberts Wesleyan.

Like the previous year, the highest-paid employees were at the University of Rochester Medical Center. The list was led by Steven Goldstein, vice president of the University of Rochester Medical Center and CEO of Strong and Highland hospitals. Goldstein made $1.5 million in compensation and $117,586 in contributions to employee benefit plans.

Like some other UR officials, Goldstein saw his compensation rise as the result of cashing out a life insurance policy. The policy, which gave Goldstein $682,400, had been offered by the university and had changing tax implications, which prompted the cashing out.

University of Rochester

Revenue for the university was driven by strong performance from its health care enterprise, Paprocki said. The $2.3 billion in revenue was an increase of $137 million from the previous fiscal year.

Income from hospitals and clinics rose to $782 million from $738 million. An additional $427 million came from Medicare and Medicaid payments. The services of hospitals and clinics accounted for the largest single program service expenses with $1.2 billion.

"What you see in this 990 are positive operating results coming from continuing strong health care operations," Paprocki said. "We also had continued growth in the student population and an increase in gifts due to fundraising efforts. Those are all reflected in a very positive fiscal 2008."

Tuition and fees brought in $28 million more than in the previous fiscal year, totaling $270 million. Paprocki said the strong returns from fundraising efforts will continue to positively affect the next filing, even if the amount from gifts is smaller.

"We have some good news that won’t be reflected yet, like a pickup in pledges payable in the future," he said.

Besides Goldstein, UR had six other employees with compensation-outside of benefits and expenses-greater than $1 million. As with Goldstein, a large share of the compensation for three of the six was the proceeds of a life insurance plan. The plan allowed employees to defer compensation into an investment vehicle. When a new interpretation from the IRS made this no longer available, employees took a distribution that was listed as income, Paprocki said.

Marc Brown, professor of dermatology and otolaryngology and director of the Division of Dermatology Surgery, Oncology and Mohs Surgery at URMC, received $1.5 million in compensation and $30,234 in benefits. Brown performs skin cancer surgeries and runs a multidisciplinary melanoma group practice.

Michael Maloney, an associate professor in the department of orthopedics and orthopedic surgeon, got $1.3 million in compensation and $32,141 in benefits. Maloney was named medical director of the newly opened URMC Surgery Center.

Joel Seligman, UR president, was the highest-paid employee outside URMC. Seligman received $639,495 in compensation, $31,666 in benefits and $55,828 in expenses, the filing states.

UR’s total assets increased to $3.82 billion from $3.75 billion at the beginning of the year, while its liabilities increased to $1.29 billion from $1.16 billion.

The university paid $35.6 million to its top five contractors for non-professional services, driven mostly by construction costs. The previous year it spent nearly $60 million on construction. LeChase Construction Services LLC received $13.9 million in the most recent fiscal year and the Pike Company Inc. received $12.2 million, though the filing noted that the amounts are estimates of the service component of the total contracts with these companies.

UR also paid a collective $5.5 million to its top five contractors for professional services, including $1.8 million to Nixon Peabody LLP for legal services.

Rochester Institute of Technology

The area’s second-largest school in terms of revenue saw only marginal growth during the fiscal year. Total revenue remained largely flat at RIT even as income from tuition grew nearly $25 million from the previous fiscal year.

After garnering $538.2 million in total revenue the previous fiscal year, RIT brought in $538.7 million. Expenses grew to $485 million from $474 million the previous year.

The college brought in $301 million in tuition revenue. It also spent a total of $256 million on compensation for its officers and directors-both current and former-and other employees plus pension contributions and employee benefits. In all, RIT had 1,546 employees making more than $50,000.

William Destler, RIT president, had the highest compensation of all local presidents with $658,252. He also received $53,346 in benefits and $11,596 for expense accounts and other allowances. Former President Albert Simone remained high on the list for RIT employees, pulling in $291,776 in compensation along with $33,844 in benefits and $6,364 in expenses after leaving just prior to the start of the fiscal year.

After Destler, the next-highest-compensated current employee was James Watters, senior vice president for finance and administration, with $379,582 in compensation, $33,619 in benefits and $2,659 for expense accounts and other allowances. Nabil Nasr, director of RIT’s Golisano Institute for Sustainability, received $305,503 in compensation along with $32,942 in benefits.

The university’s total assets rose during the fiscal year, reaching $1.35 billion after starting the year at $1.33 billion. Liabilities fell to $365 million from $380 million.

RIT paid $517,678 to Nixon Peabody for legal services, the most among all contractors for professional or non-professional services. It also paid Holland & Knight, an Orlando-based legal firm, $440,032.

St. John Fisher College

St. John Fisher saw the largest percentage of revenue growth among all local colleges. Its revenue increased 9 percent to $95.7 million, up from $88 million the previous year.

Fisher received $83.6 million from tuition and fees, and its direct public support rose from $2.2 million to $5.5 million. Training camp for the Buffalo Bills brought in $619,449 for the year.

General expenses during the period rose to $87 million from $81 million.

Total assets grew from $175 million to $178 million at the fiscal year’s end, while total liabilities fell to $68 million from $71 million, partly because of a decrease in mortgages and other notes payable.

The college spent $34 million on compensation for officers and other employees along with pension and benefits contributions. Fisher had 219 employees who were paid $50,000 or more.

President Donald Bain had the largest compensation at $280,590, along with $23,179 in benefits and $11,972 in expenses. The college’s highest-paid employee after Bain was Arthur Walton, dean of the school of education, with $258,261. Walton also received $14,587 in benefits.

LeChase was the school’s highest-paid contractor, receiving $3.9 million for construction work. The college also paid $3.7 million to Bon Appetit for food services and $2.3 million to Sungard Collegis Inc. for information technology services.

Nazareth College

At the only local institution to post a revenue decline for the fiscal year, Nazareth College officials see it more as a result of a special situation than a trend. After receiving $87 million in revenue for the year ending June 30, 2007, Nazareth fell to $82 million the following year.

Margaret Cass Ferber, Nazareth vice president of finance, attributed the drop to onetime circumstances, such as a larger amount of unrestricted giving in 2006 related to the Nazareth Arts Center renovation and $11 million in sales of securities in the fiscal year ending in June 2007. The school brought in $3.2 million with such sales the following year.

Ferber also noted that income from tuition and fees grew by $4 million and annual fundraising for operations grew year over year.

"We still have growth in our revenues because of our growth in enrollment and tuition and fees increases," Ferber said.

Nazareth’s expenses grew to $77 million from $71 million. The largest expense was compensation, including salaries and benefits, which totaled $32 million. The college paid 235 employees $50,000 or more.

Though it will not show until the next filing, Ferber noted, Nazareth delayed planned salary increases because of a gathering storm in the national economy.

"We did not announce salary incremental raises July 1 as we ordinarily would, but decided to wait for fall enrollment," Ferber said. "In October we determined we would be able to go forward with a modest increase."

The college’s highest-paid employee was President Daan Braveman, who took $304,800 in compensation, $64,965 in benefits and $69,872 in expenses.

Nazareth paid $2.9 million to Parkhurst Dining Services Inc. for food service and $2.8 million to Sodexho Inc. for facilities services. Its total assets were $188 million and total liabilities $55 million.

Roberts Wesleyan College

The area’s smallest college in terms of revenue, Roberts Wesleyan grew revenue to $36 million from $34 million the previous year. Expenses grew $2 million to $34.6 million.

The college spent $20.6 million on compensation, including salaries for key employees and all others, along with pension plan contributions and employee benefits. This represents 60 percent of all functional expenses, the largest share among area colleges. A total of 108 employees were paid $50,000 or more.

President John Martin was the highest-paid employee with $218,010 in compensation and $49,299 in benefits.

Roberts Wesleyan reported $82 million in total assets and $9 million in total liabilities. The filing listed only one contractor, Paramount Painters of Rochester, which was paid $54,527.